Flexible Spending Accounts (FSA) are available to employees who work at least a 50% FTE or 19 hours per week. FSA's allow you to save on your health care and dependent care expenses on a pre-tax basis. Because you do not pay Federal and Social Security taxes on money that goes into your FSA, you decrease your taxable income and potentially increase your spendable income.
A medical FSA allows you to save for health care expenses such as: deductibles, copayments, coinsurance payments, uninsured dental expenses, vision care expenses (e.g. eyeglasses or contact lenses), hearing care expenses (e.g. a hearing aid) and orthodontia*. With a medical FSA, you can be reimbursed an amount up to the total annual contribution you have elected regardless of your account balance. You can begin to use all or some of the total amount elected as soon as the plan year begins.
The maximum annual amount you can deposit into a Health Care FSA for 2020 is $2,750.
*A full list of eligible and ineligible FSA expenses are defined and listed in IRS Publication 502, available online at www.irs.gov/publications. You can also view EBC Flex's Eligible Expense Examples.
Dependent care FSA
A dependent care FSA allows you to save for daycare expenses for your child, disabled parent or spouse. Dependent care FSA's are not for medical expenses for dependents (you would want to elect a Medical FSA for medical expenses for dependents). Generally, dependent care expenses are eligible if they are the result of care for:
- Your children, under the age of 13, for whom you are entitled to a personal exemption on your federal income tax return.
- Your spouse or other dependents, including parents, who are physically or mentally incapable of self-care.
With a dependent care FSA, you will be reimbursed only for dependent care services you have already received. If you submit a claim for an amount that exceeds your account balance, you will be reimbursed on a pay period basis until you have made enough additional contributions to cover the expenses.
The maximum annual amount you can deposit into a dependent care FSA for your family is $5,000.